The Storm System Pointing Towards Florida Is Now Given 60% Odds Of Being Named Later This Week

Energy prices are trading at an 8 week low to start Tuesday’s session as negative sentiment on demand and a weak technical outlook continue to overshadow several refinery upsets around the US and the world.

The storm system pointing towards Florida is now given 60% odds of being named later this week, although early path predictions keep it on the east side of the state meaning it may be a headache for drivers from Miami to Jacksonville, but shouldn’t have any impact on oil production or refining.

BP reported a net loss for the 2nd quarter due to large adjustment items that overshadowed stable cash flow streams. Adjusted earnings were still relatively healthy, but the company noted “sensitive” product cracks and heavy crude differentials as concerns heading into the 3rd quarter, although it’s clear their Whiting refinery will be a big beneficiary of the Exxon Joliet downtime that boosted product prices and pushed Canadian crude discounts sharply lower. The company also highlighted its decisions to pause its investments in renewable diesel and SAF production during the quarter, while continuing to invest green hydrogen facilities and several off-shore wind projects.

P66 posted Q2 earnings that were down 40% from a year ago, as the expected weakness in refining and renewables margins offset stronger earnings from their midstream and chemicals segments.

The EIA highlighted the 2% increase in US refining capacity last year in a note this morning, led by the 250mb/day increase at Exxon’s Beaumont TX facility that was the largest facility increase in almost 2 decades. The note also detailed Valero’s 25mb/day expansion at its Port Arthur refinery, and Marathon’s Galveston Bay project that on paper makes that facility the largest in the country, although in practice it seems like the facility is consistently unable to reach those run rates given a string of operational upsets the past 2 years.

More trouble at the 2 large refineries threatening to be game changers in the Atlantic basin. The Dangote refinery in Nigeria is reportedly reselling crude oil purchased from US producers as operational upsets are preventing that oil from being used. Meanwhile, Mexico’s Dos Bocas refinery continues to be unable to ramp up operations, and despite so many false claims from the President, new reports now suggest the facility won’t be making products on a commercial scale for another year.

Russia has been considering another ban on diesel exports in the past couple of weeks according to a Reuters report, and then one of the country’s largest plants was struck again by a Ukrainian drone on Sunday.